Companies going bankrupt/into administration

[raspberry-blower]

Toys"R"Us filing for bankruptcy in the States, over $5 billion in debt.

That's pretty impressive for a company whose business strategy involves buying bits of Chinese plastic for pennies, sticking it in a shiny box and selling it from warehouses for dollars. How do you screw that up to the tune of $5bn?

It takes a particular type of managerial talent that is all too common.

It's called asset stripping - load a company up with debt then get your hands on the best bits when it invariably goes belly up.

[emordnilap]

To deflect that criticism (of what is all too common a strategy), they're blaming it on on-line competition of course.

[emordnilap]

and here's Charles Hugh Smith talking about it.

if a CEO refuses to load a company up with debt, a private-equity financier with access to cheap Federal Reserve credit will scoop up the company in a private buyout, fire the management, extract immense profits by loading the company with debt, then take the hollowed-out shell public again, reaping another windfall of financialized gains.

Note that the private-equity financiers have every incentive to lay off employees, especially experienced workers who earn higher salaries, to reduce costs before they take the hollowed-out shell public.

He makes the point that governments, corporations and individuals now rely substantially upon debt as a normal modus operandum.

[raspberry-blower]

Another airline in trouble: Monarch Airline on the brink as licence in doubt

Considering the current status of the company’s finances it is unclear if a temporary licence renewal from the CAA would prevent the company from going into administration, raising significant questions for the more than six million passengers expected to fly this year from airports including the company’s base in Luton, London Gatwick, Birmingham, Leeds, and Manchester

[Potemkin Villager]

Another airline in trouble: Monarch Airline on the brink as licence in doubt

Considering the current status of the company’s finances it is unclear if a temporary licence renewal from the CAA would prevent the company from going into administration, raising significant questions for the more than six million passengers expected to fly this year from airports including the company’s base in Luton, London Gatwick, Birmingham, Leeds, and Manchester

I wonder if the apparently uberprofitable Ryanair may be in the same ball park? Declaring anxious sounding plans for ultra expansion and ever increasing declared numbers followed by an embarrassing forced retreat is a sure Enron like marker for dark skies ahead.

[kenneal - lagger]

If Ryanair is just short of pilots, as they claim, Monarch going bust could give them the injection of staff that they want. It might save scumbag, Michael O'Leary, having to pay his pilots more money as well. He'll be pleased about that being a low cost, high profit airline and all!

[Potemkin Villager]

Yes Ken but can all the "low cost" carriers be profitable at the same time?

The personal self interest capitalist system itself is a bit like a packet switch telecoms system with a brickwall finite capacity or an interconnected grid with a cascade shutdown finite capacity.

Once the system overloads and is driven on further into the entropy zone by desperate interested parties to try and maintain growth bau by "any means" the collapse pattern becomes even more unpredictable and potentially more terminal.

But I think many here have worked this out already.

Ah well back to a bit more Lonnie Johnson on Spotify for me.

[kenneal - lagger]

This is all showing that the "free market" bit of the current economic fad is not tenable and will eventually lead to the dominance of "The One" which will rule over us all! We have already passed the end of the free market capitalist system and are well into corporatist system but this is being disguised as a capitalist system because it involves socialism for the corporations. Now they have their safety net in place the corporations can carry on getting bigger by swallowing up their competition safe in the knowledge that if they do make a cockup, as Lloyds did in taking over HBOS, they will be baled out by the taxpayer.

Eventually there will be "The One" in each sector and some time after that just "The One" globally. Long before that happens the human race will be just a bunch of slaves to a few psychopaths running the system.

Luckily for us the economic system or the ecological system will collapse and eventually take a few of us back to somewhere near the stone age.

If we can exchange the free market bit for a regulated system we might carry on with some level of prosperity for a bit longer. Prosperity is relative and in this case it is relative to the stone age!

[adam2]

Monarch have now ceased trading, as forecast.

[johnhemming2]

This is all showing that the "free market" bit of the current economic fad is not tenable

It shows unsustainable private sector businesses come to an end whilst those run by the state get more and more central funding or increase their prices.

[kenneal - lagger]

This is all showing that the "free market" bit of the current economic fad is not tenable

It shows unsustainable private sector businesses come to an end whilst those run by the state get more and more central funding or increase their prices.

RBS and Lloyds? The car makers in the USA?

[raspberry-blower]

Aren't the airlines subsidized with no VAT on aviation fuel?

Cheap airlines business models are only possible with loopholes and lax interpretations of the rules. Even then it is not always a viable concern.

By the way the website that anyone affected by this collapse is this:
https://monarch.caa.co.uk/

[kenneal - lagger]

Aren't the airlines subsidized with no VAT on aviation fuel?...

The Bretton Woods Agreement of 1944 ensured that there would be no taxation of any kind for aircraft fuel at the insistence of the USA. So airlines are subsidised compared to trains and buses which pay tax on their fuel.

(Edited one time - Ken Neal)

[emordnilap]

Aren't the airlines subsidized with no VAT on aviation fuel?...

The Bretton Woods Agreement of 1944 ensured that there would be no taxation of any the insistence of the USA. So airlines are subsidised compared to trains and buses which pay tax on their fuel.

And, of course, who pays for the infrastructure, the additional roads required to service the airports, the cost of pollution, the cost of education for the people involved, the emergency services etc etc.

To that extent you could argue that much of the corporate world is subsidised - but for untalked-about reasons the airline industry is a Very Special Case.

Oh, and no VAT.

[kenneal - lagger]

...And, of course, who pays for the infrastructure, the additional roads required to service the airports, the cost of pollution, the cost of education for the people involved, the emergency services etc etc.

To that extent you could argue that much of the corporate world is subsidised - but for untalked-about reasons the airline industry is a Very Special Case.

Oh, and no VAT.

That goes for the Road Transport industry as well although they do pay a little in Road Fund License (or whatever it's called these days).

The whole economic system is skewed by the ability of polluters to dump their exhaust into the atmosphere completely free of charge. You can't dump into waterways or the land (unless it's artificial fertilisers or agrichemicals) free of charge, at least in the UK and Europe, but the air that we all breath is different for some reason.